The Retiree Advocate

Friday, December 30, 2011

As 2011 draws to a close, the effects of what is a really a second “Great Depression” continue to ravage the Washington State economy, our public budgets, our critical social services, and our safety net. Unfortunately the legislature was able to do little in December to help.

On December 14, after sending the Governor an administrative savings bill that reduces the $2 billion budget deficit by 24 percent, the legislature adjourned. While many expected more from the Special Session because of pressure from advocacy groups and the occupy movement both in Olympia and in legislative districts, no new revenues were raised and no jobs bills were passed. The real showdown over jobs, revenue and services will confront us in January.

It came as no surprise that the legislature was unable to solve a $2 billion revenue problem in an end-of-the-year Special Session. In November, Governor Gregoire put out a set of austerity options to cut $2 billion from the budget. Then just before the start of the Special Session she announced a willingness to support a temporary one-half cent sales tax increase. But no path to resolution was worked out between the Governor’s office and the House and Senate. And apparently there was no magic wand either.

The legislature can now do three things to increase revenue and create jobs. The question remains: What are they willing to take on, and how hard are they willing to fight?

First, a joint Senate and House proposal for an infrastructure bonding proposal could be passed with a 60% vote in the legislature. The House and the Senate differ in magnitude of the proposed bond offering and types of projects it would fund. But the common goal is to dedicate a portion of a capital revenue stream from which to bond in order to build or repair needed projects now to help lift us out of this depressed economy.

With $2 billion in infrastructure bonding we could create 15,000 construction jobs in storm water clean-up projects, energy retrofits, repair of bridges and state park infrastructures, etc.; create another 15,000 induced jobs in other sectors; and generate $30 million in sales taxes for our operating budget.

Thirty thousand jobs would lower our overall unemployment by more than 10 percent and our unemployment rate by 1%. Now this is something to write home about. At this writing the House is considering about $ 1.8 billion and the Senate somewhere between $850 million and $1 billion in infrastructure bonds. We encourage both houses to consider $2 billion.

Second, the legislature can securitize a small portion of operating funds through a simple majority vote (though there is still a legal question over whether it requires a 50% or 60% vote) allowing the legislature to borrow money from the future to pay for healthcare services and jobs now. This would be bridge financing until the federal Affordable Care Act and associated funding takes effect in 2014.

Finally, the legislature needs to raise new revenue. During the past three years $15 billion in budget deficits have been closed through $10 billion in service cuts and jobs cuts and approximately $5 billion in federal stimulus money. Now it’s time to raise revenue. Although the legislature could raise revenue by creating new taxes, raising existing tax rates, or by closing tax loopholes, it is unlikely that they will be able to meet the supermajority requirement imposed by I-1053. With supermajorities, politics and ideology trump good policies.

So the question is: Will the legislature put a comprehensive revenue package out to the public for a spring vote? A comprehensive package could close tax loopholes benefiting banks and corporations that have not paid their fair share over the years, create a wealth tax on our state’s highest income residents, create a state capital gains tax, and fund a working families tax rebate, returning a large portion of sales tax payments to workers in low-income employment. Any of these ways of raising or adjusting revenue would address both the grievances and the needs of the 99%.

The Governor and many senators are talking about raising the sales tax by ½ cent over the next three years. This is the simplest and quickest way to raise revenue. But since it is primarily the working class that will have to foot the bill, will the people vote for it?

Finally we need to watch out for any trades the Governor and legislative leadership are willing to make to send a revenue package of any sort to the people for a vote. Demonizing state employees, privatizing government functions, and attacking collective bargaining rights are all shortsighted and unacceptable.

The 2012 legislative session and political season will test the mettle of the 99%.
-----------------

Jeff Johnson is president of the Washington State Labor Council, AFL-CIO, and a member of PSARA.

If you were outraged by the $800 billion TARP bailout of US banks and investment houses, hold on to your hat – you ain’t seen nothin’ yet!

A GAO (General Accounting Office) audit of the Federal Reserve has revealed that between 2007 and 2010 the Fed bailed out US and foreign banks to the tune of $16 trillion. Some independent estimates put the total as high as $29 trillion.

The money was handed out at near zero interest, and some of it has reportedly been loaned back to the US government. In other words, the Fed not only “saved” the world’s biggest banks, but also created an opportunity for them to make money at the expense of US taxpayers.

According to Sen. Bernie Sanders (I-VT) “This is a clear case of socialism for the rich and rugged, you’re-on-your-own individualism for everyone else.”

To put this huge sum into perspective, remember that the gross domestic product (GDP) of the United States is only $14.12 trillion. The entire national debt of the United States government spanning the whole of its 223-year history is only $14.5 trillion.

The budget that is being publicly debated with so much sound and fury in Congress only amounts to $3.5 trillion, yet the bailouts authorized by the Fed were never publicly debated by anyone in any venue.

Some of the Fed’s transactions were already known – the so-called “Maiden Lane Transactions” whereby the Fed created a new financial vehicle to purchase the assets of Bear Stearns and AIG, for example.

Many of the Fed’s deals remained secret, however, until the first-ever GAO audit was completed in December.

Since the global financial crisis began in 2007, Fed Chairman Ben Bernanke has worked overtime to save Wall Street's biggest banks while concealing his actions from Congress behind an alphabet soup of special facilities designed to transfer funds to Wall Street.

It literally took an act of Congress to get Bernanke to release information detailing the Fed's actions. Progressive Democrat Alan Grayson (D-FL) joined with Libertarian Republican Ron Paul (R-TX) to amend the Dodd-Frank Wall Street Reform Act to require an audit of the Federal Reserve.

Bloomberg News also filed a Freedom of Information Act lawsuit to acquire documentation of the Fed’s lending.

Based on those documents, economics professor and Bloomberg contributor Randall Wray estimated that even the GAO’s $16 trillion figure is far too low. According to Wray, the real amount distributed by the Fed is closer to $29 trillion.

As you might expect, the biggest US banks and investment houses took away the biggest haul, with Citigroup, Morgan Stanley, Merrill Lynch (now a division of Bank of America), and Bank of America leading the pack.

However, British, Swiss, German, French, Belgian, and South Korean banks also got a piece of the action.

Besides the sheer volume of money the Fed handed out, the GAO report also revealed that the Fed helped many financial institutions to make money off the bailout.
According to the GAO report, the Fed outsourced most of its emergency lending programs to private contractors, many of which were also getting extremely low-interest secret loans.

The Fed outsourced virtually all the operations of their emergency lending programs to huge financial corporations like JP Morgan Chase, Morgan Stanley, and Wells Fargo, while giving the same firms trillions of dollars in loans at near zero interest rates.

Altogether about two-thirds of the contracts that the Fed awarded to manage its emergency lending programs were no-bid contracts. Morgan Stanley, for example, got the largest no-bid contract to help manage the Fed bailout of AIG – a contract worth $108.4 million – while it received more than $2 trillion in bailout money.
Another appalling fact revealed by the GAO is that the Fed has no system to deal with conflicts of interest, despite the serious potential for abuse.

According to the GAO report, the Fed even provided conflict of interest waivers to employees and private contractors so they could keep investments in the very same banks and investment houses that were given emergency loans.

“Many Americans are struggling to understand why banks deserve such preferential treatment while millions of homeowners are being denied assistance and are at increasing risk of foreclosure,” Rep. Elijah Cummings (D-MD), the ranking member of the House Oversight and Government Reform Committee, said in a letter to Bloomberg News.

The following three new members were elected to the Executive Board at the December meeting of the Board:

Susan Levy is a retired professor of economics and labor relations at Shoreline Community College and former president of AFT Washington. She currently serves as vice president of the Retiree Chapter of AFT WA and as their representative to the Social Security Works WA Coalition.

Tom Lux, a 35-year member of the Machinists Union, was on the union staff for eight years. He currently serves as a member of the Aerospace Joint Apprenticeship Committee. He is on the visiting committee of the Harry Bridges Chair at the U.W. and is the WA state vice president of the Pacific Northwest Labor History Association.

Mark McDermott is a 40-year activist in labor, anti-poverty, economic justice, immigrant rights and faith-based social justice movements. He currently serves on the board of One America and on the Advisory Committee of the Faith Action Network. He is doing popular justice education with a number of unions and community-based organizations.

Reed Wacker, a recent graduate of the Web Design program at Seattle Central Community College and a 1998 graduate of Seattle’s Roosevelt High, becomes PSARA’s new web master this month.

Lorraine Pozzi, who brought us into the 21st Century by creating PSARA’s excellent web page, has requested to be relieved of her duties. She has been a stalwart volunteer, whose skills and insights have been a superb resource for our organization.

“Reed brings skill, enthusiasm and commitment to this important assignment,” PSARA President Robby Stern said. “He is creating a new web page design, which will be posted in March. Until then, our web page will continue in its present form.”

In addition to his design skills, Reed has had media experience as a writer for the Huffington Post and as a radio host for 99.9 KISW FM.

Happy New Year! We wish for all our members good health – and an abundance of political activity throughout Election Year 2012!

Election activity – and adding new members to PSARA – now there’s a marriage made in heaven!

If you were with us for our Membership Meeting and Holiday Party, you know that we set for ourselves an ambitious goal for growth in 2012. Two hundred and seventy-five new members – a significant step up from the 250 we added in 2011. Ambitious – but achievable in the context of working throughout 2012 for candidates and campaigns that will make a difference.

As you read each new issue of The Retiree Advocate, make a mental note of the articles your friends and political associates will find stimulating. Then stick the newsletter in your purse or pocket. Keep it with you all month long!

Use The Retiree Advocate as a conversation opener – then invite your new friend to join PSARA, the activist, leading-edge organization for retirees – and for all who hope to retire.

Recruiting new PSARA members of all ages. Building PSARA’s membership strength even as you engage in election activity. On to 275 new members! On to a people’s victory in November

This year will mark the thirtieth year the MLK Jr. Celebration Committee has organized a broad based, grassroots community salute to the legacy of the Reverend Dr. Martin Luther King Jr. in the greater Seattle area. We are involving hundreds of people from the Black, Latino, Native American, Asian, Pacific Islander, labor, faith based, environmental and progressive white neighborhoods located in every part of the Puget Sound Region.

In order to celebrate and focus most accurately on what Dr. King was fighting for in the last three years of his life, our committee has selected the theme “Recapturing Martin Luther King’s Revolutionary Spirit!”

During the years 1966-68, Dr. King significantly expanded his dream for America. He was organizing a Poor People’s March with the aim of closing down the United States Congress until legislation was passed to eliminate poverty in our nation. He spoke out uncompromisingly against the war in Vietnam. And, he was brutally murdered standing up for sanitation workers in Memphis.

Dr. King was killed because he was advocating for a radical political and economic democracy in our country.

We will highlight this more truthful reflection of Dr. King’s legacy as we mobilize thousands of people to celebrate Dr. King’s birthday at Garfield High School on Monday, January 16th, 2012. Check out the website at www.mlkseattle.org

As usual we have organized a great array of workshops, covering such topics as “Mass Incarceration in a Color Blind Society, “How to Redistribute Wealth in a Corporate Economy,” “Closing the Achievement Gap in the Public Schools,” and many more. These workshops will take place from 9:30a.m. until 11:00a.m. in classrooms inside Garfield school. At 11:00a.m., we will host a community rally inside the Garfield gymnasium. At 12:30p.m., we will begin our annual march from Garfield to the Federal Building on 2nd and Madison.

Senator Ron Wyden (D-Ore.) has joined one of the bitterest foes of Medicare, Representative Paul Ryan (R-Wis.), to propose “bipartisan” legislation that would give private, for-profit insurance companies entry into the program. The Ryan-Wyden proposal was hailed by GOP presidential candidates Mitt Romney and Newt Gingrich, and condemned by liberal Democrats, including California Representative Pete Stark, who said the proposal “ends Medicare as we know it, pure and simple.”

Here’s AFL-CIO President Rich Trumka’s assessment:

By Rich Trumka
President, AFL-CIO

The Ryan-Wyden proposal cripples Medicare in order to give the Republican Party a political boost and to earn Senator Wyden praise from powerful people who care more about the appearance of bipartisanship and insurance industry profits than the health of America's seniors.

The basic idea is to have private for-profit insurance companies compete with traditional Medicare. But we already know this does not work since Medicare is more cost-effective than private plans and for-profit insurance companies "compete" by cherry-picking healthier patients and making it harder for their sicker patients to get the care they need.

This zombie idea has already been tried and has already failed. We tried it before with Medicare Advantage, which failed to reduce costs or deliver quality care. Medicare Advantage's costs were 13 percent higher than traditional Medicare.

Rep. Ryan spent 2011 on the defensive, defending his politically deadly proposal to replace traditional Medicare with vouchers for private insurance. The Congressional Budget Office already found that plan would increase overall health care costs by $34 trillion over 75 years and increase out-of-pocket costs by $6,000 per senior per year.

Ryan-Wyden is not about cost containment, and even its authors admit that vouchers would not be more cost-effective than traditional Medicare. So as a fallback they propose a budget cap, but they neglect to provide the necessary details about how their failsafe mechanism would work or who would pay the price for failure.

The Ryan-Wyden plan betrays a fundamental misdiagnosis of the problem of health care cost growth. We agree that if America fails to bring health care cost growth under control, health care costs will eventually bankrupt families, private businesses, state governments, and the federal government. But Medicare, which is more cost-effective than private insurance, is not the problem, it is the solution to runaway health care costs.

It is the height of irony that the Ryan-Wyden plan destabilizes the most effective tool we have to control health care cost growth, which is Medicare. Under Ryan-Wyden, private for-profit insurance companies will cherry pick the healthiest seniors and stick Medicare with sicker and more costly seniors, driving up costs for Medicare, fragmenting and destabilizing the Medicare risk pool, and leaving traditional Medicare to wither on the vine.

In the end, the answer to the problem of health care cost growth is for more people to use Medicare, not fewer. The Ryan-Wyden zombie proposal takes us in exactly the wrong direction.